Volume cloning has been cancelled.
Error 87 extending destination volume
Image processing task has failed
ImageProcessingTask FAILED. Fault name: sysimage.fault.ImageProcessingTaskFault
Cloning failed!
Looks like a manual cancel as you said. No other visible errors.
Are you resizing the disks? If so, try defraging the machine first.
Is this over a WAN by chance?
Doublecheck any DNS or NIC duplex settings.
You can also try using the standalone install of converter version 3.0.2-u1 (www.vmware.com/downloads/converter). With this you can follow the best practice guide - http://kb.vmware.com/kb/1004588 It will also produce slightly different logs which might help identify the issue. But for the most part it appears like some sort of timeout.